In cases where consumers have purchased a vehicle on credit or with payments over time, the loan is generally secured by the vehicle itself. If the borrower then defaults on the loan by failing to make the agreed-upon payments, the vehicle can be reclaimed by the lender as the collateral for that loan. The resulting process is known as recovery or, more commonly, repossession.
What repossession means
Repossession of a vehicle simply means that the lender is taking back the collateral for the loan. Depending on the terms of the contract, even one day of default or late payment may be sufficient for the lender to begin repossession proceedings. In most cases, no legal action is required in order for the lender to take back the property. Repossession does not end the debt owed by the borrower; even after the vehicle has been recovered and sold at auction, any remaining balance is still the responsibility of the borrower.
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